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'Zombie' Debt Bill Heard in Texas House Committee

Wednesday, April 19, 2017 6:50 AM

Rep. Nicole Collier (D-Fort Worth), author of HB 1767, says her bill will put an end to "zombie" debt collections. This occurs when debts that are legally dead are brought back to life by legal action from third-party debt collectors.

Many consumers are unaware that time-barred debt (over four years old) is past the statute of limitations, and consumers unknowingly help the collector revive the debt. Collectors are not obligated to inform the debtor that the debt is time barred.

The bill adds a new chapter 397 to the Finance Code Title 5, Protection of Consumers of Financial Services, prohibiting debt buyers from initiating contact or bringing any action against a debtor if collection is barred by the statute of limitations. A violation could result in the debt buyer being liable to the debtor for actual damages and attorneys’ fees.

This does not apply to the original creditor, only to third-party debt collectors.

The bill was left pending.

For more information, please contact Texas Credit Union Association President Jeff Huffman at 469-385-6488 or jhuffman@txcua.coop.